Babergh District Council
| Jurisdiction | UK Non-devolved |
| Judgment Date | 14 March 2011 |
| Neutral Citation | [2011] UKFTT 341 (TC) |
| Date | 14 March 2011 |
| Court | First-tier Tribunal (Tax Chamber) |
[2011] TC 01201
[2011] UKFTT 341 (TC)
John Clark (Tribunal Judge) (Chairman)
Geoff Tack, DLA Piper LLP, for the Appellant
Peter Mantle, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents
Procedure - Application for allocation of appeal as "complex" case under the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273), r. 23 - Whether tribunal empowered to make allocation - Exercise of discretion under transitional provisions - The hearing involved an important procedural matter concerning the allocation of the appeal as "complex" - If the tribunal were to so allocate the appeal, the parties also applied by consent for the case to be referred to the President of the Tax Chamber with a request that it should be considered for transfer to the Upper Tribunal - A difficulty with this appeal was that the notice of appeal was given before commencement of the First-tier Tribunal and the proceedings were regarded as "current proceedings" as defined in the Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (SI 2009/56), Sch. 3, para. 1(2) - In simple terms, the question of principle which the application raised was whether a pre-1 April 2009 appeal could be allocated as a complex case under r. 23, bearing in mind that the rules came into force on 1 April 2009 and that there was no corresponding form of allocation of cases under the previous rules - The tribunal noted that nothing in the rules permitted the allocation of a pre-1 April 2009 appeal to any of the categories set out in r. 23 - However, that did not finally determine the question raised by the appellant's application - Since the appeal fell to be treated as "current proceedings", it was subject to the Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (SI 2009/56), Sch. 3, para. 7 - In the tribunal's view, this gave the tribunal discretion to give a direction to ensure that the proceedings were dealt with fairly and justly - The tribunal considered it to be in the interests of justice for the possibility to be kept open of a pre-1 April 2009 appeal being transferred to the Upper Tribunal - Although the current case concerned a relatively small amount of VAT, the principles under consideration were likely to affect a large number of similar appeals awaiting a hearing - The substantive dispute concerned the UK legislation introducing a three-year cap under the Value Added Tax Act 1994, Value Added Tax Act 1994 section 80 subsec-or-para 4s. 80(4) with retrospective effect by virtue of the Finance Act 1997, Finance Act 1997 section 47s. 47 - The House of Lords had already found in Fleming (t/a Bodycraft) v R & C Commrs[2008] BVC 221 that a similar provision in the Value Added Tax Regulations 1995 (SI 1995/2518), reg. 29(1A) should be disapplied for periods before the introduction of the relevant legislation due to Parliament's failure to provide a transitional period in compliance with EU law - The appellant contended that the provision as a whole was rendered ineffective by the manner of its introduction and it was common ground that the central issue of the dispute was whether national legislation introduced in a manner which had been ruled as inconsistent with the principles of EU law could be regarded as effective in relation to periods arising after its legislative implementation - The parties submitted that this was an appropriate role for the Upper Tribunal sitting as a court of first instance in a matter of public interest and that this case was important, having the potential to provide an authoritative and legally binding decision in order to bring clarity and legal certainty to an area of law which had been the subject of longstanding dispute between substantial numbers of taxpayers and the commissioners - In summary, the parties submitted that everything pointed to the designation of the appeal as "complex", and for it to be considered for transfer to the Upper Tribunal - Held, that the case satisfied the condition in r. 23(4)(b) and, in accordance with the general power in Sch. 3, para. 7(3), a direction was given that the case should be allocated to the complex category - The case was referred to the President of the Tax Chamber with a request that it be considered for transfer to the Upper Tribunal.
1.This is a decision on an application made jointly by consent of the parties. It concerns a procedural matter of considerable importance. The application is for the appeal of Babergh District Council ("the Council") to be allocated as a Complex case under Rule 23 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (SI/2009/273 (L.1)). Unless stated otherwise, references in this decision to "Rule" or "Rules" are to this statutory instrument. If the Tribunal does so allocate the appeal, the parties also apply by consent for the case to be referred to the President of the Tax Chamber with a request that it should be considered for transfer to the Upper Tribunal under Rule 28.
2.Having regard to the common position taken by the parties, Mr Tack and Mr Mantle made joint submissions. Where appropriate, Mr Mantle indicated points where the views of the Respondents ("HMRC") did not entirely match those expressed by Mr Tack on behalf of the Council. I refer where necessary to such points, but would emphasise that in broad principle the parties' views were the same. With this degree of agreement, I do not find it necessary to summarise the parties' arguments.
3.I deal first with the application for allocation as a Complex case, as Rule 28 applies only to Complex cases. If the appeal cannot be allocated as a Complex case, it will be precluded from consideration under Rule 28.
4.The difficulty arising with this appeal is that notice of the Council's appeal was given on 17 March 2009. Thus the appeal shortly preceded the commencement of the First-tier Tribunal, having been made to the VAT and Duties Tribunal. The proceedings are "current proceedings" as defined in paragraph 1(2) of Schedule 3 to The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (SI 2009/56), which I refer to as the "Transfer Order").
5.There had been a suggestion that another appellant with a similar case in respect of which notice of appeal had been given after 31 March 2009 might instead have been the principal appellant in relation to the number of similar cases to be determined. If that had occurred, the allocation question might not have arisen in the particular significant way that has occurred in relation to the Council's appeal. However, for reasons not put before me, that other party chose not to be put forward in this way for the purposes of this hearing. I therefore have to consider the question as it affects the Council's appeal.
6.Put shortly, the question of principle which the Council's application raises is whether a pre-1 April 2009 appeal can be allocated as a Complex case under Rule 23. The principle needs to be established before entering into the merits of the Council's application, since if such allocation is not possible, there is no point in considering the reasons which are put forward in support of the application. Before referring to other cases where this principle has been considered, I set out the terms of Rule 23 itself.
7.It provides:
(1)When the Tribunal receives a notice of appeal, application notice or notice of reference, the Tribunal must give a direction allocating the appeal allocating the case to one of the categories set out in paragraph (2).
(2)The categories referred to in paragraph (1) are:
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…
(d) Complex cases, in respect of which see paragraphs (4) and (5) below.
(3)The Tribunal may give a further direction re-allocating a case to a different category at any time, either on the application of a party or on its own initiative.
(4)The Tribunal may allocate a case as a Complex case under paragraph (1) or (3) only if the Tribunal considers that the case
(a) will require lengthy or complex evidence or a lengthy hearing;
(b) involves a complex or important principle or issue; or
(c) involves a large financial sum.
(5)If a case is allocated as a Complex case
(a) rule 10(1)(c) (costs in Complex cases) applies to the case; and
(b) rule 28 (transfer of Complex cases to the Upper Tribunal) applies to the case.
8.The Rules came into force on 1 April 2009, and therefore paragraph (1) of Rule 23 did not apply to the Council's notice of appeal. Under the VAT Tribunal Rules 1986 (SI 1986/590) there was no corresponding form of allocation of cases, and thus no basis for treating the Council's appeal as a Complex case. Paragraph (1) of Rule 23 does refer to an "application notice", but it is clear from the terms of Rule 21 (which I do not set out in this decision) that this refers to starting proceedings by an originating application, and not to a notice of an application of the type under consideration here.
9.I consider the construction of Rule 23(3) later in this decision.
10.As the proceedings are "current proceedings" for the purpose of the Transfer Order, they are subject to paragraphs 6 and 7 of Schedule 3 to that Order:
6.Any current proceedings are to continue on and after the commencement date as proceedings before the tribunal.
7(1)This paragraph applies to current proceedings that are continued before the tribunal by virtue of paragraph 6.
(2)Where a hearing before an existing tribunal (except for the Commissioners for the general purposes of the income tax) began before the commencement date but was not completed by that date, the tribunal must be comprised for the continuation of that hearing of the person or persons who began it.
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(3)The tribunal may give any direction to ensure that proceedings are dealt with fairly and justly and, in particular, may
(a) apply any...
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National Exhibition Centre Ltd
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